The Legault government has opened the door to fund a new baseball stadium to match the Quebec tax paid by future Expos-Rays players. However, this will be around $ 4.25 million per year, according to estimates Press.
Stephen Bronfman’s group is proposing to build a new baseball stadium at Peel Basin to bring a timeshare team between Tampa Bay and Montreal, but they are asking Quebec for a “financial contribution” to build the stadium. Mr. Bronfman’s group and the Legault government did not specify the amount requested.
“If there was a baseball team in Quebec tomorrow morning, players would pay taxes in Quebec, taxes we would not have [sans équipe]. So if we take a portion of the tax revenue and then give it to a business that gives us that business, everyone wins. […] We need to make sure that Quebec will receive more spin-offs, and therefore real tax revenue, than the amount of aid that will be given to [cette] business, ”said Quebec Premier François Legault at a news conference last Tuesday. He talked about a five-year horizon for doing this grant / tax calculation.
Over the course of five years, Expos-Rays players would therefore pay $ 21.2 million in taxes to the Quebec government, with a total salary of $ 75 million in Canadian dollars per season.
If the project worked, Expos-Rays players, who would spend three-quarters of the season outside Quebec, would likely be considered non-Quebec residents for tax purposes. They would only pay Quebec tax on their wages in relation to the days in Quebec during the season, confirmed to Press two professors of tax law, Annick Provencher (University of Montreal) and Khashayar Haghgouyan (Laval University).
“Unless you choose to be tax resident in Quebec, players will be taxed [au Québec] only when they are here to do their job, says Annick Provencher, professor of tax law at the University of Montreal.
A powerful incentive for players to be taxpayers in Florida: there is no state income tax. Florida residents thus have the lowest tax rate in the United States (37%, the federal rate), while Montreal is the most important baseball destination with the highest tax rate (53%).
For the 2019 season, Expos-Rays would have spent 22% of its season in Montreal (42 days out of 187), according to our calculations. For tax purposes, players should therefore be considered to have earned 22% of their salary in Quebec.
In 2021, the Rays have a salary of 56.5 million US dollars, or 71 million Canadian dollars. With a salary of 75 million Canadian, we come to taxes of 4.25 million dollars per year in Quebec for the players of Expos-Rays. They would also pay $ 4.55 million a year in federal taxes to the Government of Canada.
Mr. Bronfman’s group has never publicly quantified its estimate of the economic and tax benefits of its timeshare baseball team project. He did not want to comment on that.
No taxes in Quebec for opponents
On the fiscal front, opponents of Expos-Rays would not be profitable for the Quebec government. Both Quebec and Ottawa do not tax professional athletes from foreign sports teams on the income they have earned during their stay in Quebec or Canada.
In discussions with Quebec, the Montreal team could also try to claim the tax paid by the baseball team on the profits in Canada, and QST paid on tickets to matches in Montreal.
For corporation tax, Rays generated an average annual profit of C $ 40 million per year between 2015 and 2019, according to Forbes. By allocating 50% of this profit to a company that would pay tax in Quebec, we reach a corporation tax of 2.3 million per year in Quebec. In return, if the team lost money – as it did in 2020 due to the pandemic, according to Forbes –Canadian owners could probably deduct losses in other businesses.
For QST on baseball tickets, using data from a 2013 study commissioned by Mr. Bronfman (41 games with 37,281 spectators at $ 33.10 per ticket), revenue would be around 3.7 million per year for Quebec.
Almost unanimously, economists believe that a baseball team creates very little real economic benefit: it rather displaces the money of the inhabitants of a city, since it collects the income from the consumption budget of the city’s inhabitants. From one activity to another. For example, a QST on a baseball ticket would have been collected on other items purchased in Quebec anyway.